Graphic: Santosh Sharma/Mint
Graphic: Santosh Sharma/Mint

PVR’s September quarter is no blockbuster, and not a flop either

  • Screen additions are strong, with 42 new screen openings so far in FY20. This should aid revenue growth in future
  • The company’s screen additions have been strong, with 42 new screen openings so far in FY20

Multiplex operator PVR Ltd put up a good show for the September quarter, with revenues exceeding Street expectations. Consolidated revenues rose robustly by 37% over the same period last year to 973 crore. A Bloomberg poll of analysts had estimated revenues of 894 crore.

This was helped by screen additions and reasonable movie content performance. Good traction for Bollywood movies such as Mission Mangal, Chhichhore, Kabir Singh and Dream Girl helped. The Lion King did well from the Hollywood space. Plus, sales from the food and beverages segment also saw robust growth.

The firm says its Ebitda (earnings before interest, tax, depreciation and amortization) margin expanded by 230 basis points from a year ago to 20.5%. This is excluding the impact from Indian Accounting Standard 116 . A basis point is 0.01%.

While these factors augur well, there are some discomforting elements, too. For instance, advertising revenue growth and footfall growth on a comparable basis (i.e. assuming the same number of screens as last year) stood at only 5% and 6%, respectively, year-on-year.

“Muted footfall growth despite blockbuster Hindi/English movies demonstrates that PVR continues to struggle for market share gains and may have seen minor losses," says Karan Taurani, research analyst at Elara Capital Ltd.

“On the advertising front, growth has been relatively better versus peers for this quarter due to higher share of annual deals which has saved the day; post the recovery in the advertising spends market for cinema, expect PVR to underperform versus peers in medium term," he added.

Meanwhile, the company’s screen additions have been strong, with 42 new screen openings so far in FY20. This should aid future revenue growth.

PVR shares ended 1% higher on Thursday after the September quarter numbers were announced. Still, investors are sitting on pretty gains, as the stock has gained 17% in the past one month. The recent appreciation in its share price is likely to cap meaningful near-term gains.

While movie content performance is paramount for multiplex firms in general, PVR investors will watch advertising income growth closely in the coming days.

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